7.
Importance of Price Elasticity for
decision making
• Importance of Price Elasticity for decision making
The business firms considers price elasticity of demand when they take
decisions regarding pricing of the goods. This is because change in the price of
a product will bring about a change in the quantity demanded depending
upon the coefficient of price elasticity
• Price Elasticity can answer following Question
What will be the effect on sales of my firm if I will increase price by 10%?
How much I need to reduce price to get 25% more sale?
• Uses in Economic Policy Regarding Price Regulation and Crop Restriction of
Farm Products